7/21/2015

Art Market Slowing?

The Wall Street Journal takes a look at Christie's recent financial releases, and although at record levels, questions if the trend and momentum will continue. The WSJ looks at a slowing of growth rates at Christie's as a factor for its prediction.

The Wall Street Journal reports

The art market is enjoying record prices, but there are signs the pace of its growth may be slowing.

London-based auction house Christie’s International PLC said Monday that it sold £2.9 billion, or $4.5 billion, of art during the first half of the year. The total represents an 8% increase in British pounds from the same period last year, but it amounts to a statistical dead heat in U.S. dollars, a telling plateau after several seasons of runaway growth.

Even factoring in currency fluctuations related to the strong dollar, Christie’s 8% sales increase during the 2015 first half represents a winnowing from the 12% increase it saw a year ago compared with 2013.

Christie’s latest total included $4 billion in auction sales, an 11% increase from a year ago. Its $515 million total in privately brokered art sales was a 38% drop from $828.2 million in the 2014 first half.

Rival Sotheby’s, based in New York, said it auctioned $3.2 billion in art during the first half, the same auction total it achieved a year earlier. Both auctioneers said their totals through June 30 excluded some art sold during a marquee June sale series in London that stretched into early July. Sotheby’s is scheduled to release its consolidated totals in August.

In a realm dominated by “I can’t believe you own that masterpiece,” both houses fared well selling art trophies during the first half, including Christie’s nearly $180 million Pablo Picasso, “Women of Algiers (Version O),” and Sotheby’s $66.3 million Vincent van Gogh, “The Allée of Alyscamps.” Both were sold in May in New York.

But the slackening pace of sales growth indicates a few collectors may be feeling a measure of sticker shock. Christie’s first-half totals fell 37% to $110 million for old master paintings, 19th century European paintings and Russian art. Those categories suffered in part because Russian bidders sat out sales as tensions with Ukraine escalated. Christie’s also struggled with its luxury segment, which includes wine, watches and jewelry. It sold $382.3 million of these luxury goods during the first half, down 19% from a year ago.

Stephen Brooks, Christie’s global chief operating officer, said collectors aren’t bowing out. What is happening, he said, is that sellers of blue-chip artworks are getting choosier about where and when they put their pieces up for saleand for how much. He said that fewer collectors chose to sell their art privately this spring, resulting in a “lumpy marketplace” for private sales that he expects will surge by year’s end.

Shoppers are also looking at cheaper art alternatives. Christie’s had a 14% bump in the number of bidders vying for middle-market artworks, or pieces roughly priced between $100,000 and $1 million, he said.

“We’re not seeing a letup in interest,” he added. “We’re seeing a balanced market.”

Roughly a quarter of Christie’s clientele during the first half of the year was first-time bidders, so Christie’s challenge this fall, Mr. Brooks said, is to find artworks that appeal to novice and seasoned bidders alike. One strategy will be to offer more mixed-category sales in which pieces span several collecting categories instead of being lumped into a single art period or style, he added.

In Amsterdam, Christie’s sales rose 16% to $22.8 million during the first half in part, he said, because the house began offering sales that blended high-end furniture and contemporary art with the old masters that traditionally sell well there.

Christie’s also tried to stir up more interest in its impressionist and modern-art category by conducting a cross-category sale on May 11 that combined older mainstays like Claude Monet with coveted examples by living artists like Peter Doig and Cady Noland. The sale, called “Looking Forward to the Past,” totaled $706 million. “Collectors love that diversity,” Mr. Brooks said.

In terms of categories, Christie’s sold $1.4 billion in postwar and contemporary art, up 8% from the 2014 first half, and $1.2 billion in impressionist and modern art, up 8.5%.

Christie’s sales of Asian art also grew 25%, to $461.4 million, compared with a year ago. Mr. Brooks said the house owes much of its success in the category to a consignment of coveted pieces from the estate of Asian art dealer Robert Hatfield Ellsworth that drew bidders despite China’s volatile stock market.

Collectors in the U.S. outspent all rivals this spring, taking home $2.2 billion of art from Christie’s, up 26% from the 2014 first half. Collectors in Europe bought $1.3 billion in art, down 11% from a year ago.

The art market tends to quiet down in late July and August, but it will be tested anew at sales throughout the fall in London, Hong Kong and New York.

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The Appraiser Workshops blog was developed in 2008 to publish news connected with the personal property profession and to promote the Appraiser Workshops. Content includes appraisal ideas and tips, industry news and events, market trends and updates, surveys, educational opportunities and general commentary about personal property appraising. Visit often. Comments, news, suggestions and content contributions are always welcome.

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Todd W. Sigety, is a certified member of the International Society of Appraisers and is a partner in the Appraiser Workshop, developers of the Good, Better, "Best" Appraiser Workshop. He owns two Antique galleries in Old Town Alexandria, VA where the workshop is held. He currently serves as the President on the National Board of Directors for the International Society of Appraisers. He is also the creator and editor of the Journal of Advanced Appraisal Studies.

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